Will jobs come quick enough to help Malloy?

When it comes to economic policy, business leaders say the Malloy administration is sending mixed messages.

On the one hand Gov. Dannel P. Malloy has been far more aggressive than any of his recent predecessors in pushing an agenda that makes state government a proactive partner in convincing businesses to locate to Connecticut or stay here.

The administration awarded five companies $190 million in grants, low-interest loans and other incentives under the "First Five" program, then kept going. Eight businesses have now received help under the program, reaching a total of nearly $350 million so far.

Most controversial was the promise of $115 million in various incentives to convince hedge fudge giant Bridgewater Associates to build its new $750 million headquarters in Stamford, where Malloy used to be mayor. Critics, however, question why a wealthy hedge fund deserved help from state taxpayers to move from one Connecticut city, Westport, to another.

On Malloy's watch the state also persuaded Jackson Laboratories to build its new research center in Farmington, using a $290 million incentive package. And in October 2011 the legislature approved a $626 million jobs bill that provides state financial help for everything from start ups, to existing small companies, to corporations.

The Malloy team is convinced that this aggressive economic policy will create thousands of jobs, get the economy going and generate the tax revenues necessary to escape what has been a constant state of fiscal crisis. The problem for the governor is that it will take time and the corner may not be turned in time for his 2014 re-election.

Business leaders also warn that while all these incentive deals might say open for business to some select companies, inconsistent tax and fiscal policies are sending the opposite signal - stay away.

Connecticut's best economic development tool, said John Rathgeber, president and CEO of Connecticut Business and Industry Association, would be "making the changes needed to control spending, demonstrate fiscal discipline, and make government more efficient."

Instead the administration - after assuring the business community that a series of taxes imposed when Malloy arrived in office after his 2010 election would only be temporary and sunset this year - is now asking the legislature to extend them. These include the corporation tax surcharge, the electric generation tax (the only one in the nation), and the insurance premium tax credit limit.

The problem with going back on such a promise is that businesses want some certainty in their long-range planning. When a state seems in constant fiscal turmoil, and is always changing its tax policies, it creates uncertainty and makes other states more attractive.

The continuation of the electric generation tax is particularly troublesome. It falls most heavy on Millstone (nuclear) Power Station in Waterford and the four largest natural gas power plants. Those five plants pay about 95 percent of the proposed generator tax. Extending the tax works against Malloy's stated policies of trying to lower energy costs and promote greater use of natural gas, because it is cheaper and cleaner than oil and coal.

But this is a governor who finds himself in a bind, having agreed to no layoffs and pay raises under the past concession deal, he can do little to cut labor spending. Many of the expenses he faces are fixed. And Malloy has been unwilling, so far, to seek a rollback of state employee retiree benefits, though he has taken steps to more adequately fund them.

Malloy is probably right. The governor elected in November 2014 will benefit from the job creation produced by all these state-assisted business expansions. The question is whether that governor will be Dan Malloy.